What is the waiting period to buy a home with a past foreclosure?

What is the waiting period to buy a home with a past foreclosure? The truth please! It depends. It’s probably not what you wanted to hear; however, it’s the truth. Assuming you are seeking a conventional loan that will be underwritten according to the Fannie Mae rules, you’ll have to wait seven years from the foreclosure date. Keep in mind, there may be other loans that you qualify for like FHA or VA that have different rules. Staying with the assumption that your goal is to qualify for a conventional loan, there are softer rules available. 

If your Foreclosure was caused by an extenuating circumstance, the waiting period is three years. Additionally, with an extenuating circumstance, you would only wait 3-7 years depending on if you have 10% or more down payment. Furthermore, there are requirements for re-establishing credit.

An extenuating circumstance defined by Fannie Mae is, “Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” In order to prove an extenuating circumstance, you must provide documentation to substantiate your claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.)

In my experience, proving an extenuating circumstance could be a very subjective. Your future home ownership is in the hands of an underwriter. Also, don’t forget some lenders especially your national banks have “bank overlays”. Bank overlays are hard fast rules, like 4 year waiting period and no exceptions.

What is the waiting period to buy a home with a past foreclosure? The truth please! It depends, but usually 3-7 years. Your best course of action when looking to buy or build your home, is seek a licensed residential mortgage loan originator who you trust and will review your situation and then provide guidance to achieve the american dream of homeownership. If you are in Texas (especially North Central Texas), contact Jimmy Smith NMLS#1089067 at (214) 872-9091 for a free no obligation loan consultation or click on this hyperlink.